Authors’ Response: The Continuing Evolution of China’s Resource Quest

We wrote By All Means Necessary: How China’s Resource Quest Is Changing the World to illuminate one of the most discussed but least understood dimensions of China’s rise, and we are grateful for the four kind and thoughtful review essays. Indeed, the months since the book was published have only made the importance of the subject clearer. The China National Offshore Oil Corporation (CNOOC) has begun drilling for oil near the Paracel Islands, sparking a heated confrontation with Vietnam that the United States and regional powers are struggling to respond to.¹ The China National Petroleum Corporation (CNPC) has signed a 30-year gas supply deal with the Russian company Gazprom, reflecting a mix of confidence on China’s part in its ability to manage imports, a strong desire to increase the use of natural gas, and, critically, a continuing motivation to diversify its sources of supply.² Meanwhile, countries around the world are shifting their policies partly in response to Chinese investment. Chinese investment in Myanmar, for example, continues to fall precipitously—in just three short years, China is estimated to have moved from first to tenth place in overall FDI in Myanmar—reinforcing the importance of host-country politics in shaping opportunities for Chinese business.³ As analysts and policymakers struggle to understand and respond to these and other developments, we are heartened that the reviewers see By All Means Necessary as a valuable guide.

Nonetheless, they have some concerns. Llewelyn Hughes writes that we “do not convey a strong sense of how effective [state control over Chinese firms] is and what the implications are for China’s external behavior.” Elizabeth Wishnick similarly comments that “the focus of By All Means Necessary is primarily on China’s commercial relationships, and it would have been interesting for the book to explore the foreign policy implications of these relationships further.” These issues are a central thread running through chapters four through six, though many of our findings are dispersed. We summarize some of those findings here.

By All Means Necessary does not provide a single “strong” bottom line, but that is because there is none—the answers to these questions, as Wojtek Wolfe observes in his essay, vary with circumstances. We show, for example, that state control is weaker over private firms than over state-owned ones; that state influence varies depending on market structure; that the government is only inconsistently able to direct even state-owned firms toward its political ends; and that these limitations are not unique to Chinese firms operating abroad, but rather reflect relationships between the state and firms that play out at home too. To the extent that the Chinese government can harness individual firms toward its political ends, this is primarily by influencing them through general conditions, such as the availability of financing for overseas projects or leadership incentives related to party promotion, rather than through specific directives. The most immediate consequence for Chinese external behavior is simple: China cannot use its firms to fulfill its foreign policy goals nearly as effectively as many assume. Indeed, as we show in By All Means Necessary, the Chinese experience fits with what Hughes describes as a more general one, with “poor governance outcomes at home and abroad” often the result. For example, we document China’s repeated but failed efforts to raise the standards of its extractives firms operating abroad, and note that firms operating abroad but outside Chinese state control can create foreign policy headaches for Beijing.

Hughes also writes that “a second important issue given insufficient attention relates to Chinese firms’ entry into markets unrelated to fossil fuel–based resources.” In particular, he is concerned with our neglect of Chinese firms’ activities in “green” technologies, which he claims are related to “growing [Chinese] demand for natural resources.” We agree with Hughes that there is some relationship here—in...